Information sharing, information free-riding and capital structure in oligopolies

Dasgupta, Sudipto and Shin, Jhinyoung (1999) Information sharing, information free-riding and capital structure in oligopolies. International Journal of Industrial Organization, 17 (1). pp. 109-135. ISSN 0167-7187

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Abstract

We study the effect of capital structure decisions on the incentives for firms in a duopoly to share information through a trade association. Focusing on the case of Cournot competition with demand uncertainty, we find that the standard result for all-equity firms that information will not be shared may be reversed. When one firm has better access to information than the other, leverage may be a way for the latter firm to free-ride on the former firm's information. With ex ante symmetric firms, a trade association will be formed even if information sharing does not occur.

Item Type: Journal Article
Journal or Publication Title: International Journal of Industrial Organization
Uncontrolled Keywords: /dk/atira/pure/subjectarea/asjc/2200/2202
Subjects:
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 74566
Deposited By: ep_importer_pure
Deposited On: 07 Jul 2015 13:32
Refereed?: Yes
Published?: Published
Last Modified: 01 Jan 2020 09:17
URI: https://eprints.lancs.ac.uk/id/eprint/74566

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